The European Commission’s Maroš Šefčovič maps the way forward for EU-US collaboration on energy security and critical minerals

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Maroš Šefčovič
Executive Vice-President for the European Green Deal, European Commission


Ana Swanson
Trade and International Economics Reporter, the New York Times

Opening remarks

Landon Derentz
Senior Director, Global Energy Center, Atlantic Council

LANDON DERENTZ: Well, good afternoon. I’m Landon Derentz, senior director of the Atlantic Council Global Energy Center and Morningstar chair for global energy security. Very excited to welcome our in-person audience and those joining us around the world virtually to AC Front Page. The AC Front Page is the Atlantic Council’s premier platform for live conversations with world leaders tackling today’s greatest challenges.

To that end, it’s my distinct pleasure to introduce you to a leader that has been an absolute stalwart of the transatlantic relationship and, as we had an opportunity to discuss earlier, across many, many administrations (so bipartisan support, opportunities to build partnership for many years). Maroš Šefčovič is executive vice president for the European Commission for the European Green Deal, and today’s featured speaker. We’re also joined by Ms. Ana Swanson, trade and international economic reporter at the New York Times, who will be moderating this conversation.

Later this week, the Atlantic Council will launch its flagship energy publication, The Global Energy Agenda. It’s a moment for us to reflect on what’s been accomplished in the year prior, in 2023, and an opportunity for setting new ambitions for the year ahead. Moments like today help us inform and drive forward with that outlook. And while geopolitics weighed heavily on the prior year, the European Union, through policies like the European Green Deal, like Repower EU, has demonstrated that you can be a champion for climate ambition while also prioritizing energy security and competitiveness. It’s kind of a major balancing act.

Whether navigating joint procurement of natural gas supplies or elevating the EU’s greenhouse gas emissions benchmarks, Executive Vice President Šefčovič is a central figure in shaping and transforming the future of our energy system. In a year dominated by democratic elections, it’s critical that we leverage partnerships like this and forge forward our international relations in a way that strengthens the transatlantic cooperation and helps us achieve our shared energy and climate goals. Executive Vice President Šefčovič, we’re very thankful you joined us today.

And with that, it’s my pleasure to turn the floor over to our moderator, Ana Swanson, to begin this conversation. Ana, the floor is yours.

ANA SWANSON: Thank you so much. And, as Landon mentioned, I’m Ana Swanson. I’m the trade and international economics reporter for the New York Times. Really delighted to be here. And thank you so much for joining me.

MAROŠ ŠEFČOVIČ: Thank you. Thank you for the invitation and your always very kind remarks. That’s why I’m coming back all the time, you know?

ANA SWANSON: I do want to mention up top that this event is live and on the record, and for those in the audience watching virtually you can submit questions using the “Ask AC” function, or you can submit questions on X, formerly Twitter, using hashtag #ACFrontPage. For those in the live audience, you will have the opportunity to raise your hands and ask some questions later on in the program.

So let’s dive right in. This month the EU announced climate targets for 2040 that included a 90 percent reduction in greenhouse gas emissions from 1990. How does that build on or differ from previous goals? And, obviously, the conflict with Russia has forced a reexamination of some energy policy. How is the need to shift away from Russian natural gas influencing European plans?

MAROŠ ŠEFČOVIČ: Well, thank you very much for that question to open our conversation with, because it’s, I think, very fundamental for, it was really correctly said by Landon, to find that sweet spot to do this balancing act. So for us, we have it in our climate law we should be climate neutral by 2050. So we want to be the first climate neutral continent. I think we share that ambition also with the United States of America. But we kind of enshrined it in the law.

So what is—what was very important in this communication was to launch the debate, how to get from 2030, where we wants to reduce our greenhouse gas emission by 55 percent, to 100. So what is the trajectory? How can we get there? And we wanted to launch this discussion based on very thorough impact assessment, different scenarios. What do we need from the technological development point of view? How to factor in, I would say, this absolutely new situation if it comes to the—to the energy supplies, which was one of the, I would say, most fundamental energy shifts Europe did since probably the 1970s. That from one year to another you shift away from Russian gas, from 150 billion cubic meters to a little bit more than 40 [billion] right now.

And here, I want to really do think, appreciate it, and use it as a, I would say, pattern for the future that what that good allies should do to each other. I mean, we, of course, as you know very well, we carry really the burden of having two very serious military conflicts close to our borders. And, on top of it, on helping the almost ten million refugees, in certain point of time. On opening our markets, opening our labor market, providing health care, providing the schooling for the refugees, and also providing 150 billion euros of the financial and military assistance to Ukraine. On top of that, we had to shift away from Russian fossil fuels. And we did it with great success, thanks to the excellent, outstanding cooperation with the United States of America, and the fact that the LNG sector was able to supply us with 56 billion cubic meters, again, from one year into another.

And that will be of course, for us a top priority for the next years, because we want to be climate neutral by 2050. But we know that without gas, as a very important transitional fuel, it will not be possible for us. And I think that, speaking of the global responsibility of US—and US became, indeed, the global guarantor of energy security—the responsibility goes also beyond Europe. I mean, if you want to decarbonize Southeast Asian countries, like India, but also Africa, Latin America. So simply there will be a need for this half of the carbon intensity fuel, like gas, comparing to coal, and to phase out—phase out coal. So the cooperation here is very essential. And for us, it was absolutely crucial to get the US LNG in time, despite the fact that we paid a lot for it. But, of course, the crucial was to keep the lights on, economics powered on, and really focusing how to deal with the crisis which was generated by Russian invasion of Ukraine.

ANA SWANSON: I understand that some of your recent conversations in Washington have focused around President Biden’s recent executive order about natural gas exports. Tell me about those conversations. How do you think that, you know, this order—which obviously does pertain to US environmental concerns—could impact the European economy or US-EU relations?

MAROŠ ŠEFČOVIČ: I mean, we had very good conversations on this topic yesterday at the White House, State Department, Department of Energy. And I appreciated that it was very open and constructive discussions. And what was of course very important for me was reassurance that if it comes to the next two or three years there should be no impact whatsoever on the supplies of US LNG to Europe. Then I think my interlocutor has been quite clear that, despite this announcement, what is expected in US is that export capacity of the LNG would double between now and 2030. So they should be able to accommodate also the big demand from Europe. And on top of it, there is a kind of emergency clause that if things will really go, you know, in the wrong direction, that there is a possibility to kind of adjust the measures which are currently under the discussion.

I have also the understanding for the description of the situation as it was presented to me that when the last type of this, let’s call it, inventory was done by the US government, it was in 2019. And it was well before, I would say, this shale LNG revolution started. So, I mean, to check the pipelines’ capacity, the tankers traffic, the ports, the ability to transport all that, I think it’s important. At the same time, what I was underscoring, it’s also very important, how the US government now and also in the future would approach the fact that now, indeed, you have the responsibility for the global developments in energy security.

So if you kind of make the statement, something is said in Washington, DC, about the gas and LNG, immediately it’s kind of transmitted, in a sense. I would say this has a ripple effect all over the world. We kind of felt it a little bit for a couple of—for a couple of days now. I think it’s stabilized because, indeed, the contracts are there, supplies are coming, we increased dramatically our regasification capacity to more than 230 bcm per year. So, I mean, the conditions are there that everything should follow well. But, of course, we will be continuing our discussions with the US administration, but also with the LNG sector. And we had very good meeting this morning with all LNG managers of United States.

ANA SWANSON: Mmm hmm. The shift away from Russian gas has been, you know, such a huge undertaking. I was curious if you could share, you know, maybe an obstacle that you’ve seen firsthand in that process. And then, are there any, you know, opportunities that you’ve seen in there, too?

MAROŠ ŠEFČOVIČ: I think that obstacles—there have been many, of course. The first one was that for decades, and today we can say mistakenly, we believed that through trade and good relations you can democratize the society of Russian Federation. That was, I would say, a belief which was there for a very, very long period. Very often when I was responsible five years ago for the project which was called the Energy Union, we—in Central and Eastern Europe—we remembered extremely well the lessons of 2009, the gas crisis, when simply from one day to another the gas supplies had been switched. And in our countries, including mine, Slovakia, we just had the energy left for just couple of days, and we had to completely shut down the industry and channel the remaining parts of energy to hospitals and households.

So for me, a priority at that time was that we had to diversify our energy supplies, to have at least three different sources. And I was working a lot to get there, and to build that pipeline from Azerbaijan, from increasing the capacity for LNG, to work with the Norwegians, simply to have a more diverse portfolio. But, nevertheless, if you look at it, the major flows—the major flow has been clearly coming from the east to the west. And suddenly you’re now in a situation that is a big flow, which was like almost—at certain point, almost 40 percent of gas coming from Russia through Ukraine to Europe—you had to reverse these flows.

And the good thing was that we’d been investing over the last years a lot into building of interconnectors, LNG terminals and introducing the reverse flows. But still it was—at that time we, and also I, perceived it as an emergency capacity if something goes wrong. And it’s completely different thing. Like if you now tell the whole industry, OK. This huge quantity which was coming from the east will come from the west, from the north, from the south. And you figured out how to do it. So the major problem was infrastructure, to build and complete the regasification fleet.

And, here, I would say that Germany did miracles, I would say, in very short period of time. Poland’s been very strategic in building the Baltic connectors straight from Norway, with Azeri gas help as well. The Southern Europe also, the Balkan countries building up their regasification capacities. So we’ve been kind of dealing with that in a lightning speed, I have to say. But then you had the second problem where US came in.

When you came to the global markets, everyone was telling you: Market is tight. Meaning, there is no gas for you guys, yeah? So, I mean, and then it resulted, of course, in these very high prices in certain bottlenecks, when we were getting the LNG. But I think here, again, the decision of President Biden, and that agreement which was found with my boss, Ursula von der Leyen, the president of the Commission, to focus on 50 billion cubic meters from the US to Europe was absolutely crucial. And I’m very impressed that it was even exceeded to 50 billion, because it kind of sends that calming effect. And we could then, in a more peace, look for other supplies from other corners of the world, just to have the energy we needed. So the infrastructure and the tightness of the market, that was, I would say, the major, major challenges.

ANA SWANSON: I want to shift to asking a bit about critical minerals. What kind of transatlantic cooperation are you pushing for when it comes to critical minerals? I understand this was—you know, is always and was a topic of the US Trade and Technology Council meetings last month. You know, how do you see—you know, where are those initiatives right now, and how do you see things moving forward?

MAROŠ ŠEFČOVIČ: I think we have—we have quite, quite intense, I would say, diplomatic activity around the critical minerals or critical raw materials. But I think that we are still kind of waiting and working on how to translate the diplomatic activity into the concrete projects. Because I’m a project driven person. And I think the good thing is that we understand each other, that we cooperate. But I would like to see one or two major projects which we would execute together and show, you know, how can we kind of push for the common solutions, develop the mine, or get the critical raw materials to you and to us.

Because if it comes to critical raw materials, we in Europe are much more dependent on China that we’ve ever been on Russia, if it comes to the fossil fuels. And any future energy technologies, electrolyzers, wind turbines, photovoltaic panels, chips—I mean, for all that you need the critical raw materials, rare earth, magnets and all these things, which are—we need to kind of get from outside. And simply, we are concerned that any dependency could be weaponized. And therefore, we adopted this Critical Raw Material Act, through which we want to explore everything what we have in Europe, what we have in our neighborhood, and work with our friends like United States of America on the projects in the in the third countries.

My ideal solution would be that we would advance or eventually complete our agreements on the critical raw materials, because it would—it would set the framework. And we are discussing it. We are—hopefully, we will—we will find the solution for that. And I think it will also help from the perspective that EU would finally get the FTA status, as Japan did, and it will help us in many other aspects, kind of consolidate our EU-US relations. So yesterday we also discussed the fact that we have very similar philosophy if it comes to critical raw materials.

So what I want to say is that when we would be working on some projects in a third country, we would like to make sure that it would not just be extraction of the critical raw materials, putting it on the ship, leave with the raw materials and leave the mess behind. What we want to do is develop the project, create big value added in the country, create new jobs, share the revenues and profits, and make sure that all of us would benefit. Because I think that’s the approach we would like to see in cooperation with the third countries who have the critical raw materials, and need the funding, need the expertise to make sure that these critical raw materials would be not only available but also extracted according to the highest sustainability standards.

ANA SWANSON: You mentioned Europe receiving free trade agreement status from the United States. That’s been a hurdle to European companies have been benefiting under the Inflation Reduction Act, of course. Where do those discussions stand right now? And you were just mentioning, you know, a partnership with relation to third countries. I understand that that was kind of a major hurdle in those discussions so far.

MAROŠ ŠEFČOVIČ: Yeah. I mean, there have been—I mean, yesterday with Mr. John Podesta we kind of agreed that, of course, a lot of things is going on. And, I mean, this is, like, a very, I mean, difficult time. And obviously what’s happening on the global scale, I fully understand how overwhelmed we are with the dynamics of day-to-day management, and permanent crisis management. But we also agree that let’s have another look where our critical minerals agreement was struck, why it was stuck, and what we can do to kind of intensify this negotiation. So we’re going to do that. And we gave ourselves rather, let’s say, short term, you know, to looking into it.

And at the same time, with Amos Hochstein and Jose Fernandez, we also focused on, that would be my preference, let’s select two or three projects, maybe one per continent—Africa, Latin America, Southeast Asia—and try to put our experts, our financial institutions—like EIB, like World Bank, like IMF—our development agencies together so we can actually learn how to use our experience from these territories, our financial firepower, to execute one of these projects. Because it would create, I would say, the know-how, it would create, I would say, the teams which would be dealing with these issues. And this would be, I would say, such an important topic for the future economic development both in the United States and in Europe. That we simply need to learn how to work together and execute this project.

Maybe one more thing. I am very hopeful about potential of Ukraine, because I was there many times before the war started. I was—as you probably know, I was working on this EU-Ukraine-Russia negotiations at the time, on transit of gas through Ukraine. But we’ve been also signing together with the Prime Minister Shmyhal agreement on cooperation in the field of critical raw materials. So geological surveys, mapping up of the, you know, reserves, which they have there. And to put it simply, I think Ukraine has everything what we need and what we’ve been getting from Russia. So I see the potential for critical raw materials, but also potential for low-carbon energy in Ukraine as huge, as very, very, very complementary to us.

We are already today using the huge underground gas storage to kind of beef up the energy security on Central and Eastern European front. And that would be, I would say, the one area where, again, I think EU-US can come together as a part of our reconstruction efforts to kind of build this potential Ukraine clearly has.

ANA SWANSON: That’s interesting. You were talking about looking into projects in other parts of the world, in Africa, South America. Because, you know, I think the United States and the EU are clearly very aligned on values when it comes to critical minerals, but they both tend to be, you know, really kind of consumer—net consumers, right? Big consumers of these minerals, and will both have a large demand for it. So I was curious at what point you kind of bring other countries into the—you know, your conversation, your partnership. And then how you see that dynamic kind of working, you know, vis-à-vis China, and China’s efforts to move around the world for this industry as well?

MAROŠ ŠEFČOVIČ: I think that you’re right, from that perspective, that it’s not only, let’s say, to us talking to each other because there is lots of, I would say, movement in this front, under the [Group of Seven], even [Group of Twenty]. We set up different so-called clubs for cooperation in the field of mineral extractions. And so therefore, I would say that the understanding, the intent, and this diplomatic work is, to great extent, done. Now what we need are the, let’s say, most promising projects, and go through this planning, and hopefully execution phase. So we would see how this, let’s say, diplomatic understanding is translated into the concrete projects execution. So that’s, I think, what should be the next phase.

And I think if it comes to China, indeed, that’s a huge challenge. I think 80 percent of the global critical raw materials extraction and processing is with China right now. I think we in Europe, we have only 1 percent of critical raw materials for our economy from Europe. So clearly, we need to diversify. And how to do it? I think we have to be much more agile, and we have to offer the better alternative. And the alternative is that if you are with us, I mean, we are ready to create high value added, we are ready to share, and we are—we are ready to make sure that community where these projects are, and a country where these projects are, would clearly benefit.

And we in Europe are the biggest development aid providers. We are the biggest climate finance provider. I mean, just to put this, I mean, two figures on the table in climate finance, if we put together public and private financial transfers in the realm of more than forty billion euros. And more or less the same figure goes for development aid. So I believe that we have financial firepower to kind of support these projects, and to do it with philosophy of sharing, not just extracting and taking it away, and not even creating the local jobs, and leaving with a material, and lots of debt for the local government.

So, I mean, we started a project, which is called Global Gateway. We had huge turnout in Brussels, I think it was two months ago. And I have to say that it resonated well with the countries whom we invited. But I would say that it’s a success when I will see the first project is being executed, and that we are actually delivering on this political intention with practical, concrete projects.

ANA SWANSON: I know there had been a lot of, you know, sort of heartburn and upset in the EU with regard to the Inflation Reduction Act last year. What is the status of that now? I mean, are you still, you know, worried about the inflation Reduction Act worrying certain industries away? And have internal discussions in the EU—has there been kind of a resolution about how much to subsidize green industry in response to the Inflation Reduction Act?

MAROŠ ŠEFČOVIČ: I think—well, of course, our systems are different. And I have to say that Inflation Reduction Act came to us as a surprise. I understand that it was kind of surprising conclusion also for quite many people in US. But the fact is that because of Inflation Reduction Act, some of the projects—and several of them been projects upon which I was working, like building up the battery ecosystems in Europe, building up the gigafactories. All these projects being slowed down, or postponed, or transferred to US. And for us, it came at this difficult moment which I was referring to—the energy crisis, and coping with all the, I would say, consequences of the war in Ukraine.

Of course, we are discussing this with our American friends. Therefore, I think that if we can find a way through this mineral agreement to kind of look into what we can do better together, and also use this cooperation for the FTA status for the EU, I think that would be very welcome. Very welcome development. And the next stage, which is, let’s say, my proposition I’m pitching for in all the meetings I have in US, is that we should kind of move onto the next level of cooperation. And I call it creation of the transatlantic green tech market.

So I know that it’s not the free trade agreement. But I think that we would benefit hugely if we would create, I would say, this marketplace from the perspective of, you know, common standards, from the perspective that we would inform each other about, you know, the sort of subsidies policies, or as we call it in Europe, state aid. If we kind of would push for building bridges across the Atlantic in the form of joint venture mutual investment so we can use the economies of scale for these new technologies in a way that would be beneficial not only for US and EU, but also for the third countries.

Because if you want to be serious about really dealing with the climate change, and I think that fact that we are now over the 1.5 degrees Celsius is kind of telling that the time is pressing. So Africa, Southeast Asia, Latin America, all of them would need this clean and green technologies. And sooner we develop them, sooner we develop them at scale so they’re affordable, the better it would be for the planet. So I see this transatlantic marketplace as a recipe for making our cooperation even closer, stronger, but with a very positive impact it might have on, I would say, sharing these kind of technologies with the rest of the world, and helping us to also tackle overheating of our planet.

ANA SWANSON: One area I had been following with interest was the green steel negotiations, what the US calls the Global Arrangement on Sustainable Steel and Aluminum. I was curious, you know, what happened with that negotiation? Do you think that the United States has kind of an adequate methodology to measure carbon emissions? Was that an issue? And then just kind of more generally, do you think the United States is ready for the European Carbon Border Adjustment Mechanism to come into force? Or could that be a new source of trade friction in the future?

MAROŠ ŠEFČOVIČ: I think we have—we have, I would say, two different approaches and philosophies, which kind of stem from our traditions. So we—because we’re twenty-seven different member states. So for us to work together and for our single market to perform, we, of course, have to work a lot with the legal frameworks, with the regulation, with a uniform application of the laws. So there is a guarantee that when you produce something in Slovakia, it will be produced according to the same standards as in Denmark, or Italy, and nobody needs to check it anymore, because we are kind of following the same rules. So that’s, I would say, the tradition upon which you build the European Union.

So we use the same approach to the Green Deal. We kind of look at it comprehensively from all sectors, from energy, through industry, down to the agriculture. And I think that when I talk to my American friends, nobody questions that we have probably the most advanced and most sophisticated legal framework for the Green Deal. But the issue is that the parameters of the Green Deal has changed so much because of these two crises—COVID-19, war in Ukraine, this energy spikes, high inflation—that they need to work much harder on how to translate this legal framework into reality by creating business case for the Green Deal in Europe. Because you cannot fund everything with public money. And you need this entrepreneurial energy and entrepreneurial—I would say, this entrepreneurship to bring this, I would say, new project into fruition.

In US, I mean, the approach is different. Here you—I mean, we have the same goal, to be climate neutral, to tackle the climate change. But in US, you will drive more, I would say, the projects which generate the revenue. And whatever the technology who can do it, so they do because it’s good for business and, of course, if it’s good for environment, it’s a plus. And we just discussed yesterday that now we need more of this kind of attitude and business case from US, but probably in the frame of five to ten years. Also, yes, we would need some kind of regulatory framework to know how to push the—I would say, tackling the climate change to the next stage. So we had, I would say, the different cycles. But this is, I mean, where we are. And I think we can just only learn from each other.

And therefore, I think—again, coming back to this green marketplace—would be good bridge over the Atlantic and over these two different approaches to the policy, because we share the same goal. And on CBAM, we see it clearly as an environmental measure. It’s a mechanism which should prevent the carbon leakage from Europe. More or less what I want to say is that we are looking for the ways how to reward those companies which have low carbon footprint, which have sustainable production, which treat their employees decently. And we want to avoid the eventual punishment that because of the public procurement now we go for the cheapest alternative. Often, that is somewhere from faraway—Asian countries.

Because we want—the Green Deal will be, of course, linked with our growth strategy, with creating new jobs and, of course, with bringing economic advantage as well. And I think that if I look at also the figures, what would be the effect on US exports, I think it’s like 0.5 percent, something like that. But, of course, we are working on it. We are discussing that. For me—I know that we are running out of time, but this last point.

For me, the best solution for creating level playing field on the global scale would be to have the global carbon price. I know that it’s not going to happen tomorrow. So we are working very closely also with Canadians on linking up the carbon pricing mechanism. Because I think that would help us a lot to kind of have a level playing field, that carbon has a price. And if the price is the same everywhere, then lots of problems of this kind would be avoided.

ANA SWANSON: Great. It’s time to open it up for Q&A. I do have some questions submitted online. If you’d like to submit a question in the audience, I believe someone can bring over an iPad to you, or perhaps you can ask them in the room. So let me start with one of the online questions. Someone asks: How can Europe ensure the Green New Deal does not exacerbate or confirm fears regarding deindustrialization in the EU? What can the EU do to tame electricity prices? Is there a structural fix?

MAROŠ ŠEFČOVIČ: I think, I mean, it’s very clear. I can tell you that I’m—as was kindly highlighted by Landon, on the EU affairs for probably more than two decades. But I never seen such emphasis put by the European leaders—I’m talking about presidents and prime ministers and, of course, the institutional leaders—on the competitiveness as right now. Because I think that the two crises—war in Ukraine, high energy prices—and that fear of eventual deindustrialization kind of focused the minds of the leaders that this is under no circumstances are going to happen in Europe.

And therefore, now you see the flurries of activities focused on the competitiveness. I mean, we are working on energy prices. And I will tell you in a second how. We are having very intense interaction with the business leaders. We are talking, of course, to our agriculture sector, which is very, very restless these days, because they basically lost a lot of income over the last two or three days. And we are we are really working very closely with all the sectors of the industry which are the most affected by the by the green transition, how to help them to build on the advantages and pluses we have in Europe, and not to suffer from, let’s say, unfair competition from outside.

So for us, clearly we want Europe to be green and clean, but industrial. And revenue from the industry is absolutely crucial for sustaining our European social model, which is, I mean, something what our citizens would not even think that, I mean, could be—could be changed. So it’s absolute political priority. And if it comes to energy prices, that’s of course, the big challenge. And for us, it’s a big priority. So we changed the so-called electricity market design. What it means in colloquial language is that we changed the way how we can trade electricity in Europe, where we are going back to the possibility of long-term contracts, so-called power purchase agreements, where we are looking for the way and how we can allow the companies to invest in the long term. And we are using also governmental power to kind of limit the worries of the eventual fluctuation and eventual loss, if you invest in the right technologies.

So over time, I believe it would lower the energy prices. What would help us, of course, would be if we would have even more LNG on the market, because it hopefully would help us to lower the price. Because despite the fact that we generated more electricity from renewables than from fossil fuels last year, still in our gas—in our energy system, the gas is so-called what they call the last marginal fuel. So it means that—it’s a little bit technical—that you have to calculate the overall energy price based on what is the cost of these marginal fuels.

So let’s say if you don’t have enough sun and enough water, you still need that baseload. And the baseload is coming mostly by gas. And therefore, you have to buy—you have to pay the gas price if they are producing or idling, because they’re just there on standby. And that will be there for a long time. So for us to have a competitive price of gas would help us to lower the prices in Europe for electricity.

ANA SWANSON: OK. If there are any questions in the room, there’s a microphone stand here. Happy to take some questions from inside the room. I’ll give you just a minute to get over there. Great.

Q: Hi. Good afternoon. Sophie Hamer, I’m the climate counselor here at the German embassy in DC. And thank you very much for your remarks and your very interesting input.

I was wondering, what role do you see for The Climate Club when it comes to a transatlantic green marketplace, and in setting some standards?

MAROŠ ŠEFČOVIČ: I think that—thank you very much for that question. Of course, it’s also very important because from the perspective of the generational challenge, clearly tackling the climate challenge is the more difficult one. Very often, and I know that this is difficult for every politicians because you have to deal with the crisis managing, and unfortunately you have too many crises, I would say, these days. But, I mean, from the perspective of the scale of the task, from the perspective of the importance of the task, and I would say how you would hand over the planet to the next generation, clearly tackling the climate change and have a clear roadmap how we are—how we are going to make it possible for our children and their children. I mean, in this century, it’s absolutely crucial.

And I think we’ve been working very well with Secretary Kerry. In Dubai, I think that EU-US cooperation was absolutely crucial to, at a certain moment I would even use the word, unblock the negotiations on the final document. It will be very crucial this year for climate finance COP in Azerbaijan. And, of course, absolutely topical when the Brazil will take over in the next year. So I think that work on a—in the form of Climate Club I think would be very important for the future. Because it helps you to kind of adjust the approaches, to exchange the best practices, and look for the—for the common solutions.

ANA SWANSON: Great. Maybe another here.

Q: First off, thank you so very much for your time today, your excellency. My name is Alex. I’m from Georgetown University.

And recently I had a discussion with His Excellency Enrico Letta. And we were talking about that one of the key issues about the Green Deal right now is how to finance it. And especially looking at the farmer protests right now, one of the questions is how to integrate all the mechanisms of the EU to try and finance the green transition, especially the common agricultural policy. Because right now, it seems like the Green Deal is relying a lot on NextGenEU, which is set to end soon and probably won’t continue afterwards. So how do you see this possibility of integrating the common agricultural policy, and the budget that’s allocated to that, to try and integrate into the Green New Deal—with the Green Deal? Thank you.

MAROŠ ŠEFČOVIČ: Thank you very much. I will start with the last part of your question, because, of course, agriculture is very much on the mind of every single politician in Europe. And if you look at, I would say, the situation of our farmers and foresters, you have seen that over the last couple of years, especially if it comes to farmers, their incomes dropped, in some cases significantly. One of the examples, just for you to see the scale, is that, I mean, from one year to another, let’s say, the revenue they had from cereal production and sale dropped from eighty billion euros to sixty billion euros. So, I mean, you suddenly—you have kind of loss of twenty billion euros, which is a lot of money for the farming community.

Then, of course, they suffer a lot because of the high gas prices and energy prices, because they use fertilizers, they use tractors. And simply I mean, the econometrics of the agricultural production have significantly changed over the last couple of years. And therefore, from one side when you talk to them they have lots of understanding and, I would say, they support the measures which we proposed under the Green Deal, because they know that we need to treat the soil in respect—in respectful way, that they need the biodiversity for pollinators, that we have a big problem with the droughts in parts of Europe. And I was talking to, you know, Spanish regional leaders from Andalusia, from Catalonia. I mean, their reservoirs already now, I mean, you have—at least in Brussels, we have an impression it’s raining all the time, which it is. But there, I mean, you have the water reservoirs filled like between 4 to 20 percent. And they are in the middle of what we would call in Europe the rainy season. So they understand all that.

But of course, they’re telling us that: Look, our incomes dropped. So if you want to kind of work with us on all these measures, we have to look at new sources of revenues for agriculture. Of course, one of the—one of the idea which we are testing, and we’ll see how it will be in the future. I, again, believe that we can use much more the concept of carbon removal certificates. So if you are the responsible forester, and if your forest serves as important carbon sink, or if you’re going to do what they’re going to do in Andalusia, as I heard from the—from the first minister of Andalusia—that they’re going to reforest part of the field, just to keep the water in the system, I think you should be rewarded for that.

I think—I mean, because you’re removing the carbon from the environment. So I think you should be—you should be rewarded for that. Like, you have to buy your emission allowance when you’re going to pollute. So I think you should be rewarded when you’re actually removing the carbon from the system. But for that, you need to discuss the methodology. That’s a little the same, like with the green steel and with other things. But I think that’s, I would say, one concept which we have to work.

And concerning the financial instruments, you are right that we are kind of funding the Green Deal projects from basically, I would say, two major sources. One is the seven years budget, what we call in EU-speak multiannual financial perspective. And there, it’s in the realm of 1.2 trillion euros. And like 40 percent of that is devoted to, I would say, climate-related projects. And then the NextGenerationEU, which is in the realm of eight hundred billion euros. So, again, I would say that more than 40 percent was devoted to this type of the project. But, of course, the scale of demand and change is much bigger than what you could fund from the, I would say, public funds, or through grants.

So, we are talking very intensively with the new management of the European Investment Bank, with the financial industry, because we need to work more with leveraging, with blended finance, and especially to bring also private investors, private equity investing into this transition, because it makes sense. We have to build, coming back to what I said earlier, the business case for this Green Deal project. And we are now figuring out, with the capitals of the European industry, how to achieve that.

ANA SWANSON: OK, well, we’re all out of time for today. But thank you so much for a great discussion. Thank you to everyone who joined us, both online and in the room today. And as a reminder, this event will be available both on YouTube and the Atlantic Council’s website. So thank you.


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Image: Šefčovič recounted his discussions with the Biden administration and the EU's wider cooperation with the United States at an Atlantic Council Front Page event on February 13, 2024.